Many companies entered the recession already badly limping, burdened with huge amounts of debt and marginal products or services. But Cisco Systems (Nasdaq:CSCO), Apple (Nasdaq:AAPL), Microsoft (Nasdaq:MSFT) and Google (Nasdaq:GOOG) seem to have the opposite problem - they are flush with cash and the best in class of their subsegments. While it is always reassuring to invest in a company with a large cash cushion in a recession, some adjustments need to be taken.

IN PICTURES: 20 Tools For Building Up Your Portfolio

Four Horsemen
Cisco Systems dominates the networking equipment space and had $29.5 billion in cash, equivalents and investments at the end of its second fiscal quarter ended January 24, 2009.

Apple, maker of the iPod and the Mac computer, ended its quarter on December 27, 2008 with $25.6 billion in cash, cash equivalents and short-term marketable securities.

Microsoft controls the PC desktop space with Windows and other applications and is slowly making inroads into the internet and other areas. It ended 2008 with $20.7 billion.

Google needs no introduction. And with Yahoo! (Nasdaq:YHOO) weighed down with its own problems, it doesn't seem to face much competition these days. At present, Google has $14.2 billion on its balance sheet in cash and investments. (Learn how to gain exposure to these types of stocks in Technology Sector Funds.)

Cash And Short-Term Investments MRQ (millions)

Company Cash Short-Term
Cisco $4,175 $25,356 $29,531
Apple $7,236 $18,411 $25,647
Microsoft $8,346 $12,369 $20,715
Google $6,082 $8,137 $14,219

Some adjustments and other considerations need to be made about the cash balances, however. Some of these companies have debt. Although it may be negligible, it should be netted against the companies' cash to determine net cash figures. Cisco and Microsoft have small amounts of debt, which slightly lowers net cash.

Net Cash MRQ (millions)



Net Cash
Cisco $29,531 $6,848 $22,683
Apple $25,647 $- $25,647
Microsoft $20,715 $2,000 $18,715
Google $14,219 $- $14,219

The net amount of cash does not take into account the number of shares with a claim against the cash. Therefore, the net cash should be calculated per share outstanding.

Net Cash Per Share (millions, except per share)

Net Cash


Net Cash/ST
Per Share
Cisco $22,683 5,864 $3.87
Apple $25,647 901 $28.47
Microsoft $18,715 8,914 $2.10
Google $14,219 318 $44.71

Finally, as a margin of safety, net cash per share should be compared to the market price of the stock. Apple has the highest amount of net cash per share as a percentage of it stock price.

Net Cash Per Share By Price

Net Cash/ST
Per Share

Close Price
on 2/18/2009

Net Cash/ST as
% of Stock Price

Cisco $3.87 $15.37 25.2%
Apple $28.47 $94.37 30.2%
Microsoft $2.10 $18.12 11.6%
Google $44.71 $353.13 12.7%

Sometimes a company can classify an asset as a short-term investment and then have problems with it later. In 2008, for example, many companies found that the auction rate securities they purchased could not be sold. Therefore, investors should pay special attention when evaluating stocks for future investment.

The Bottom Line
Following implementation of these adjustments, Cisco, Apple, Microsoft and Google have more than enough financial power to get through the recession. The cash can also be put to use to pick off and acquire other companies that are not faring so well during the downturn. An investor who craves exposure to equities certainly can do worse than these four stocks. At least, investors won't have to worry about these companies needing bailout money from the government. (Learn more in Pinpoint Takeovers First and How To Evaluate The Quality Of EPS.)

Related Articles
  1. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  9. Economics

    A Look at Greece’s Messy Fiscal Policy

    Investigate the muddy fiscal policy, tax problems, and inability to institute austerity that created the Greek crises in 2010 and 2015.
  10. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. The New Deal

    A series of domestic programs designed to help the United States ...
  3. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  6. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. How does the risk of investing in the industrial sector compare to the broader market?

    There is increased risk when investing in the industrial sector compared to the broader market due to high debt loads and ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!